2000 : Mah. XVI ]

GOVERNMENT  OF  MAHARASHTRA
LAW  AND  JUDICIARY  DEPARTMENT

Maharashtra  Act  No.  XVI  of 2000.

THE MAHARASHTRA PROTECTION OF INTEREST OF DEPOSITORS
(IN FINANCIAL ESTABLISHMENTS) ACT, 1999.

(As  modified  upto  1st  December  2018.)

*

PRINTED IN INDIA BY THE MANAGER, GOVERNMENT CENTRAL PRESS, MUMBAI AND
PUBLISHED BY THE DIRECTOR, GOVERNMENT PRINTING, STATIONERY AND
PUBLICATIONS, MAHARASHTRA STATE, MUMBAI 400 004.

2018

[Price : Rs.  28-00]

2000 : Mah. XVI ]

[ 2000 : Mah. XVI
( i )

THE MAHARASHTRA PROTECTION OF INTEREST OF DEPOSITORS

(IN FINANCIAL ESTABLISHMENTS) ACT, 1999.

———————

CONTENTS

PREAMBLE.

SECTIONS.

1. Short  title  and  commencement.

2. Definitions.

3. Fraudulent  default  by  Financial  Establishment.

4. Attachment  of  properties  on  default  of  return  of  deposits.

5. Appointment  of  Competent  Authority.

6. Designated  Court.

7. Powers  of  Designated  Court  regarding  attachment.

8. Attachment  of  property  of  malafide  transferees.

9. Security in lieu of attachment.

10. Administration  of  property  attached.

11. Appeal.

12. Special  Public  Prosecutor.

13. Procedure  and  powers  of  Designated  Court  regrding  offences.

14. Act  to  override  other  laws.

15. Protection  of  action  taken  in  good  faith.

16. Power  to  make  rules.

17. Power  to  remove  difficulties.

18. Repeal of Mah. Ord. XXXIV of 1999 and saving.

H 1178—1

2000 : Mah. XVI ]

MAHARASHTRA  ACT  No.  XVI  OF  20001.

[THE  MAHARASHTRA  PROTECTION OF  INTEREST OF  DEPOSITORS
(IN  FINANCIAL  ESTABLISHMENTS)  ACT,  1999.]

(This  Act  received  the  assent  of  the  President  on  the  20th  January  2000;
assent  was  first  published  in  the Maharashtra  Government  Gazette,
Part  IV,  on  the  21st January  2000.)

An Act to protect the interest of depositors in the Financial
Establishments and matters relating thereto.

Mah.
Ord.  VII
of  1999.

WHEREAS  the  Governor  of  Maharashtra  had  promulgated  the
Maharashtra  Protection  of  Interest  of  Depositors (in Financial
Establishments) Ordinance, 1999, on the 29th April 1999 (hereinafter referred
to as “the said Ordinance”) ;

AND  WHEREAS  upon  the  re-assembly  of  the  State  Legislature  on  the
22nd  October  1999,  a  Bill  for  converting  the  said  Ordinance  into  an  Act  of
the State Legislature could not be introduced in the Maharashtra Legislative
Assembly  for  want  of  time  as  the  session  of  the  State  Legislature  was
prorogued on  the 23rd October  1999 ;

AND WHEREAS as provided  by article 213(2)(a) of the Constitution  of
India,  the  said  Ordinance  would  have  ceased  to  operate  after  the
3rd December 1999, the date on which the period of six weeks from the date
of  re-assembly  of  the  State  Legislature  would  have  expired  ;

AND WHEREAS it was considered expedient to continue the operation

of the provisions of the said Ordinance by law ;

AND WHEREAS both Houses of the State Legislature were not in session
and  the  Governor  of  Maharashtra  was  satisfied  that  circumstances  existed
which  rendered  it  necessary  for  him  to  take  immediate  action  to  continue
the  operation  of  the  provisions  of  the  said  Ordinance  for  the  purposes
hereinafter  appearing  ;  and,  therefore,  the  said  Ordinance  was  repealed  by
withdrawal  and  the  Maharashtra  Protection  of  Interest  of  Depositors
(in  Financial  Establishments)  (Continuance)  Ordinance,  1999,  was
promulgated with retrospective effect that is, with effect from the 29th April
1999, on the 2nd December 1999 ;

AND WHEREAS the instructions from the President under the proviso
to clause (1) of article 213 of the Constitution of India have been obtained ;

Mah.
Ord.
XXXIV
of  1999.

Mah.
Ord.
XXXIV
of  1999.

AND WHEREAS it is expedient to replace the Maharashtra Protection
of  Interest  of  Depositors  (in  Financial  Establishments)  (Continuance)
Ordinance, 1999 by an Act of the State Legislature ; It is hereby enacted in
the Fiftieth Year of the Republic of India as follows :–-

1.

(1) This  Act  may  be  called  the  Maharashtra  Protection  of  Interest

of Depositors  (in Financial Establishments)  Act, 1999.

Short title and
commencement.

(2) It shall be deemed to have come into force on the 29th April 1999.

2.

In  this  Act,  unless  the  context  otherwise  requires,—

Definitions.

(a)  “Competent  Authority”  means  the  Competent  Authority

appointed  under  section  5  ;

1 For  Statement  of  Objects  and  Reasons, see  Maharashtra  Government  Gazette,  Part  VIII,

dated  the  13th  December  1999,  page  906.

(G.C.P.) H 1178—2–(2068–12-2018)

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Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.

[ 2000 : Mah. XVI

(b)  “Designated  Court”  means  the  Designated  Court  constituted

under section 6 ;

(c) “deposit” includes and shall be deemed always to have included
any  receipt  of  money  or  acceptance  of  any  valuable  commodity  by  any
Financial  Establishment  to  be  returned  after  a  specified  period  or
otherwise, either in cash or in kind or in the form of a specified service
with or without any benefit in the form of interest, bonus, profit or in any
other form, but does not include ––

(i) amount  raised  by  way  of  share  capital  or  by  way  of
debenture,  bond  or  any  other  instrument  covered  under  the
guidelines  given,  and  regulations  made,  by  the  SEBI,  established
under the Securities and Exchange Board of India Act, 1992 ;

(ii) amounts contributed as capital by partners of a firm ;

(iii) amounts received from a scheduled bank or a co­operative
bank or any other banking company as defined in clause (c) of section
5 of the Banking Regulation Act, 1949 ;

(iv) any amount  received  from,—

(a) the  Industrial  Development  Bank  of  India,

(b) a  State  Financial  Corporation,

(c) any  financial  institution  specified  in  or  under  section
6A of the Industrial Development Bank of India Act, 1964, or

(d)  any  other  institution  that  may  be  specified  by  the

Government in this behalf ;

(v) amounts received in the ordinary course of business by way

15 of
1992.

10 of
1949.

18 of
1964.

of,—

(a) security  deposit,

(b) dealership  deposit,

(c) earnest  money,

(d) advance  against  order  for  goods  or  services  ;

(vi)  any  amount  received  from  an  individual  or  a  firm  or  an
association  of  individuals  not  being  a  body  corporate,  registered
under  any  enactment  relating  to  money  lending  which  is  for  the
time being in force in the State ; and

(vii) any amount received by way of subscriptions in respect of

a Chit.

Explanation I.—“Chit” has the meaning as assigned to it in clause (b) of

section 2 of the Chit Funds Act, 1982 ;

Explanation II.— Any credit given by a seller to a  buyer on the sale  of
any  property  (whether  movable  or  immovable)  shall  not  be  deemed  to  be
deposit  for  the  purposes of  this  clause  ;

(d) “Financial  Establishment”  means  any  person  accepting  deposit
under  any  scheme  or  arrangement  or  in  any  other  manner  but  does  not
include a corporation or a co-operative society owned or controlled by any
State  Government  or  the  Central  Government  or  a  banking  company  as
defined under clause (c) of section 5 of the Banking Regulation Act, 1949 ;

(e) “Government”  means  the  Government  of  Maharashtra.

40 of
1982.

10 of
1949.

2000 : Mah. XVI ]

Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.
3. Any  Financial  Establishment,  which  fraudulently  defaults  any
repayment  of  deposit  on  maturity  alongwith  any  benefit  in  the  form  of
interest, bonus, profit or in any other form as promised or fraudulently fails
to render service as assured against the deposit, every person including the
promoter  partner,  director,  manager  or  any  other  person  or  an  employee
responsible for the management of or conducting of the business or affairs of
such  Financial  Establishment  shall,  on  conviction,  be  punished  with
imprisonment for a term which may extend to six years and with fine which
may extend to one lac of rupees and such Financial Establishment also shall
be liable for a fine which may extend to one lac of rupees.

3

Fraudulent
default by
Financial
Establishment.

Attachment of
properties on
default of
return of
deposits.

Explanation.—For  the  purpose  of  this  section,  a  Financial
Establishment,  which  commits  default  in  repayment  of  such  deposit  with
such  benefits  in  the  form  of  interest,  bonus,  profit  or  in  any  other  form  as
promised  or  fails  to  render  any  specified  service  promised  against  such
deposit,  or  fails  to  render  any  specific  service  agreed  against  the  deposit
with an intention of causing wrongful gain to one person or wrongful loss to
another  person  or  commits  such  default  due  to  its  inability  arising  out  of
impracticable  or  commercially  not  viable  promises  made  while  accepting
such deposit or arising out of deployment of money or assets acquired out of
the deposits in such a manner as it involves inherent risk in recovering the
same when needed shall, be deemed to have committed a default or failed to
render  the  specific  service,  fraudulently.

4.

(1) Notwithstanding  anything  contained  in  any  other  law  for  the

time  being  in  force,—

(i) where  upon  complaints  received  from  the  depositors  or
otherwise,  the  Government  is  satisfied  that  any  Fianancial
Establishment  has  failed,—

(a) to  return  the  deposit  after  maturity  or  on  demand  by  the

depositor;  or

(b) to  pay  interest  or  other  assured  benefit;  or

(c) to  provide  the  service  promised  against  such  deposit;  or

(ii) where the Government has reason to believe that any Financial
Establishment is acting in a calculated manner detrimental to the interest
of  the  depositors  with  an  intention  to  defraud  them;

and if the Government is satisfied that such Financial Establishment is not
likely  to  return  the  deposits  or  make  payment  of  interest  or  other  benefits
assured or to provide the services against which the deposit is received, the
Government  may,  in  order  to  protect  the  interest  of  the  depositors  of  such
Financial  Establishment,  after  recording  reasons  in  writing,  issue  an  order
by publishing it in the Official Gazette, attaching the money or other property
believed to have been acquired by such Financial Establishment either in its
own name or in the name of any other person from out of the deposits, collected
by the Financial Establishment, or if it transpires that such money or other
property  is  not  available  for  attachment  or  not  sufficient  for  repayment  of
the deposits, such other property of the said Financial Establishment or the
promoter,  director,  partner  or  manager  or  member  of  the  said  Financial
Establishment as the Government may think fit.

(2) On  the  publication  of  the  order  under  sub-section  (1),  all  the
properties  and  assets  of  the  Financial  Establishment  and  the  persons
mentioned therein shall forthwith vest in the Competent Authority appointed
by  the  Government,  pending  further  order  from  the  Designated  Court.
H 1178—2a

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Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.

[ 2000 : Mah. XVI

(3) The  Collector  of  a  District  shall  be  competent  to  receive  the
complaints from his District under sub-section  (1)  and  he  shall forward the
same  together  with  his  report  to  the  Government  at  the  earliest  and  shall
send  a  copy  of  the  complaint  also  to  the  concerned  District  Police
Superintendent  or  Commissioner  of  Police,  as  the  case  may  be,  for
investigation.

Appointment
of Competent
Authority.

5.

(1)  The Government may while issuing the order under sub-section
(1) of section 4, appoint any of its officers not below the rank of the Deputy
Collector,  as  the  Competent  Authority,  to  exercise  control  over  the  monies
and the properties attached by the Government under section 4, of a Financial
Establishment.

(2)  The  Competent  Authority  shall  have  such  other  powers  as  may  be

necessary  for carrying  out  the  purposes of  this  Act.

(3) The  Competent Authority shall, within  thirty days from the date of
the publication of the said order, apply to the Designated Court, accompanied
by one or more affidavits stating the grounds on which the Government has
issued  the  said  order  under  section  4  and  the  amount  of  money  or  other
property believed to have been acquired out of the deposits and the details,
if  any,  of  persons  in  whose  name  such  property  is  believed  to  have  been
invested  or  acquired  or  any  other  property  attached  under  section  4,  for
such  further  orders  as  found  necessary.

Designated
Court.

6.

(1) For  the  purposes  of  this  Act,  the  Government  may,  with  the
concurrence of the Chief Justice of the Bombay High Court by notification in
the Official Gazette, constitute one or more Designated Court in the cadre of
a District and Sessions Judge for such area or areas or for such case or class
or group of cases, as may be specified in  the notification.

(2) No court including the court constituted under the Presidency Towns
Insolvency Act, 1909 and the Provincial Insolvency Act, 1920, other than the
Designated  Court  shall  have  jurisdiction  in  respect  of  any  matter  to  which
the  provisions of  this Act  apply.

3 of
1909.

5 of
1920.

(3) Any pending case in any other court to which the provisions of this
Act apply shall, on the date of coming into force of this Act, stand transferred
to  the  Designated  Court.

Powers of
Designated
Court
regarding
attachment.

7.

(1) Upon  receipt  of  an  application  under  section  5,  the  Designated
Court shall issue to the Financial Establishment or to any other person whose
property  is  attached  and  vested  in  the  Competent  Authority  by  the
Government  under  section  4,  a  notice  accompanied  by  the  application  and
affidavits  and  of  the  evidence,  if  any,  recorded,  calling  upon  the  said
Establishment or the said person to show cause on a date to be specified in
the notice, why the order of attachment should  not  be made absolute.

(2) The  Designated  Court  shall  also  issue  such  notice,  to  all  other
persons represented  to it as having or  being likely to claim, any interest  or
title  in  the  property  of  the  Financial  Establishment  or  the  person  to  whom
the  notice  is  issued  under  sub-section  (1),  calling  upon  all  such  persons  to
appear on the same date as that specified in the notice and make objection if
they  so  desire  to  the  attachment  of  the  property  or  any  portion  thereof,  on
the  ground  that  they  have  interest  in  such  property  or  portion  thereof.

2000 : Mah. XVI ]

Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.

5

(3) Any  person  claiming  an  interest  in  the  property  attached  or  any
portion  thereof  may,  notwithstanding  that  no  notice  has  been  served  upon
him  under  this  section,  make  an  objection  as  aforesaid  to  the  Designated
Court  at  any  time  before  an  order  is  passed  under  sub-section  (4)  or  sub-
section  (6).

(4) The Designated Court shall,  if  no cause is shown  and  no  objections
are  made  under  sub-section  (3),  on  or  before  the  specified  date,  forthwith
pass  an  order  making  the  order  of  attachment  absolute,  and  issue  such
direction as  may  be  necessary for  realisation  of  the  assets attached  and for
the  equitable  distribution  among  the  depositors  of  the  money  realised  from
out  of  the  property  attached.

5 of
1908.

(5) If  cause  is  shown  or  any  objection  is  made  as  aforesaid,  the
Designated  Court  shall  proceed  to  investigate  the  same  and  in  so  doing,  as
regards  the  examination  of  the  parties  and  in  all  other  respects,  the
Designated  Court  shall,  subject  to  the  provisions  of  this  Act,  follow  the
summary procedure as contemplated under Order 37 of the Civil Procedure
Code, 1908 and exercise all the powers of a court in hearing a suit under the
said  Code  and  any  person  making  an  objection  shall  be  required  to  adduce
evidence to show that on the date of the attachment he had some interest in
the  property  attached.

(6) After investigation under sub-section (5), the Designated Court shall
pass an order either making the order of attachment passed under sub-section
(1)  of section  4 absolute  or  varying it  by releasing a portion  of the property
from  attachment  or  cancelling  the  order  of  attachment:

Provided  that  the  Designated  Court  shall  not  release  from  attachment
any  interest,  which  it  is  satisfied  that  the  Financial  Establishment  or  the
person  referred  to  in  sub-section  (1)  has  in  the  property,  unless  it  is  also
satisfied that there will remain under attachment an amount or property of
value not less then the value that is required for repayment to the depositors
of such  Financial Establishment.

8.

(1) Where  the  assets  available  for  attachment  of  a  Financial
Establishment  or  other  person  referred  to  in  section  4  are  found  to  be  less
than the amount or value which such Financial Establishment is required to
re-pay  to  the  depositors  and  where  the  Designated  Court  is  satisfied,  by
affidavit  or  otherwise,  that  there  is  reasonable  cause  for  believing  that  the
said  Financial  Establishment  has  transferred  (whether  before  or  after  the
commencement of this Act) any of the property otherwise than in good faith
and  for  consideration,  the  Designated  Court  may,  by  notice,  require  any
transferee of such property (whether or not he received the property directly
from the said Financial Establishment) to appear on a date to be specified in
the  notice  and  show  cause  why  so  much  of  the  transferee’s  property  as  is
equivalent  to  the  proper  value  of  the  property  transferred  should  not  be
attached.

(2)  Where  the  said  transferee  does  not  appear  and  show  cause  on  the
specified  date,  or  where  after  investigation  in  the  manner  provided  in  sub-
section (5) of section 7, the Designated Court is satisfied that the transfer of
the property to the said transferee was not in good faith and for consideration,
the  Designated  Court  shall  order  the  attachment  of  so  much  of  the  said
transferee’s property as is in the opinion of the Designated Court equivalent
to  the  proper  value  of  the  property  transferred.

Attachment of
property of
malafide
transferees.

6

Security in lieu
of attachment.

Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.

[ 2000 : Mah. XVI

9. Any Financial Establishment or person whose property has been or
is  about  to  be  attached  under  this  Act  may,  at  any  time,  apply  to  the
Designated Court for permission to give security in lieu of such attachment
and where the security offered and given is, in the opinion of the Designated
Court, satisfactory and sufficient, it may cancel, the order of attachment or,
as the case may be, refrain from passing the order of attachment.

Administration
of property
attached.

10. The  Designated  Court  may,  on  the  application  of  any  person
interested in any property attached and vested in the Competent Authority
under  this  Act  and  after  giving  the  Competent  Authority  an  opportunity  of
being  heard,  make  such  order  as  the  Designated  Court  considers  just  and
reasonable  for—

(a) providing from such of the property attached and vested in the
Competent Authority as the applicant claims an interest in, such sums
as  may  be  reasonably  necessary  for  the  maintenance  of  the  applicant
and  of  his  family,  and  for  expenses  connected  with  the  defence  of  the
applicant where criminal proceedings have been instituted against him
in  the  Designated  Court  under  section  3;

(b)  safeguarding,  so  far  as  may  be  practicable,  the  interest  of  any
business  affected  by  the  attachment  and  in  particular,  the  interest  of
any partners in such business.

Appeal.

11. Any person including the Competent Authority, if aggrieved by an
order  of  the  Designated  Court,  may  appeal  to  the  High  Court  within  sixty
days from the date of the order.

Special Public
Prosecutor.

12. The  Government  may,  by  order  appoint  one  or  more  Advocates  of
not less than ten years standing as a Special Public Prosecutor in consultation
with the District and Sessions Judge of the concerned District or the Principal
Judge of the City Civil and Sessions Court, Greater Bombay for the purpose
of  conducting  the  cases  in  the  Designated  Court.

Procedure and
power of
Designated
Court
regarding
offences.

13.

(1)  The  Designated  Court  may  take  congnizance  of  the  offence
without the accused being committed to it for trial and, in trying the accused
person,  shall  follow  the  procedure  prescribed  in  the  Code  of  Criminal
Procedure, 1973, for the trial of warrant cases by Magistrates.

(2)  The  provision  of  the  Code  of  Criminal  Procedure,  1973,  shall  so  far
as  may  be,  apply  to  the  proceedings  before  a  Designated  Court  and  for  the
purposes of the said  provisions a Designated Court shall be deemed to be a
Magistrate.

2 of
1974.

2 of
1974.

Act to override
other laws.

14. Save  as  otherwise  provided  in  this  Act,  the  provisions  of  this  Act
shall have effect notwithstanding anything inconsistent therewith contained
in  any  other  law  for  the  time  being  in  force  or  any  custom  or  usage  or  any
instrument having effect by virtue of any such law.

Protection of
action taken
in good faith.

15. No  suit  or  other  proceedings  shall  lie  against  the  Government  or
the  Competent  Authority  or  an  officer  or  employee  of  the  Government  for
anything which is in good faith done or intended to be done under this Act.

Power to
make rules.

16.

(1)  The  State  Government  may,  by  notification  in  the Official

Gazette, make rules to carry out the purposes of this Act.

(2) Every rule made under this Act shall be laid, as soon as may be, after
it is made, before each House of the State Legislature, while it is in session
for a total period of thirty days, which may be comprised in one session or in

2000 : Mah. XVI ]

Maharashtra  Protection  of  Interest  of  Depositors
(In  Financial  Establishments)  Act,  1999.

7

two successive sessions, and if, before the expiry of the session in which it is
so  laid  or  the  session  immediately  following,  both  Houses  agree  in  making
any modification in the rule or both Houses agree that the rule should not be
made, and notify their decision to that effect in the Official Gazette, the rule
shall  from  the  date  of  publication  of  such  decision  in  the Official  Gazette,
have effect only in such modified form or be of no effect, as the case may be,
so  however,  that  any  such  modification  or  annulment  shall  be  without
prejudice  to  the  validity  of  anything  previously  done  or  omitted  to  be  done
under  that  rule.

17.

If any difficulty arises in giving effect to the provisions of this Act,
the Government may, as occasion arise, by order, do anything, not inconsistent
with the provisions of this Act, which appears to it to be necessary to remove
the  difficulty:

Power to
remove
difficulties.

Provided  that, no  such order  shall  made after  the  expiry of  a period  of

two years  from the date  of commencement of this Act.

Mah. Ord.
XXXIV of
1999.

18.

(1)  The  Maharashtra  Protection  of  Interest  of  Depositors
(in  Financial  Establishment)  (Continuance) Ordinance,  1999  is  hereby
repealed.

Repeal of
Mah. Ord.
XXXIV of 1999
and saving.

(2)  Notwithstanding  such  repeal,  anything  done  or  any  action  taken
(including  any  notification or  order  issued)  under  the said  Ordinance,  shall
be deemed to have been done, taken or issued, as the case may be, under the
corresponding  provisions  of  this  Act.

GOVERNMENT CENTRAL PRESS, MUMBAI

[ 2000 : Mah. XVI

Maharashtra Government Publication
can be obtained from—

THE  DIRECTOR
GOVERNMENT PRINTING, STATIONERY AND PUBLICATION
MAHARASHTRA  STATE
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MUMBAI 400 004.
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GOVERNMENT PRESS AND BOOK DEPOT
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Phone  :  0240  -  2331468,  2331525

THE  MANAGER
GOVERNMENT PRESS AND STATIONERY STORE
Tarabai  Park,
KOLHAPUR 416 003.
Phone  :  0231-2650395,  2650402

AND THE RECOGNISED BOOKSELLERS

